Constitutional Amendment Would Shine Light on ‘Dark Money’

An amendment to the state constitution proposed for the November 2016 ballot would make Californians the first in the nation with a constitutional right to know about the big money behind political campaigns and efforts to sway government decisions.

“The people of California have a compelling interest in ensuring that money used to fund campaign activity and to influence governmental action be disclosed publicly so that the people may make informed electoral choices and ensure government is acting in their interests,” according to the introduction to the proposed constitutional amendment.

The goal is to give financial transparency the same state constitutional stature as other basic rights, like privacy, free speech, assembly, access to government meetings and the writings of public officials. In addition, it tightens and updates existing state laws.

If approved by voters, the ballot initiative “will make us the most advanced state in the nation, including the federal government, in tracking campaign funds,” said Gary Winuk, former chief of the Enforcement Division at the state’s Fair Political Practices Commission or FPPC. “There’s not even a close second.”

It’s the first major revision of California’s 40-year-old Political Reform Act and comes at a time when the U.S. Supreme Court's 2010 "Citizens United" decision has unleashed a flood of "dark" money into political campaigns.

The Attorney General’s office is expected to OK the proposition in mid-November and then its backers will have 180 days to gather 585,000 valid signatures to put it on next year's ballot.

So far, the $250,000 cost of putting the proposition -- known as the Voters' Right to Know Act -- together, including consultants and voter surveys, has been financed by Los Gatos software entrepreneur Jim Heerwagen.

But Heerwagen said in a telephone interview he wants a “broad base of support” to fund the signature gathering and related costs for the November, 2016 campaign.

If he paid for it himself, he said, “it would indicate the measure is not needed, (that) people don’t feel passionate about it.”

He said he decided to provide seed money for the initiative because he is the father of three college-age sons and was concerned about their perception that “the system is rigged so their participation in democracy doesn’t matter.”

“Nine times out of 10 you find political money tilting the outcome away from the public interest,” said Heerwagen, citing issues like payday lending which works to the disadvantage of low-income workers and health labels on sodas, which are opposed by industry.

Heerwagen and Winuk collaborated with Bob Stern, co-author of the landmark Political Reform Act of 1974, on the new ballot proposal, and all three cited “dark money” as a major problem today, both in political campaigns and in influencing state lawmakers.

When Winuk was head of FPPC enforcement in 2012, he led an investigation into secret donors who used nonprofits to hide their identities as they poured $15 million into ballot initiative campaigns.

“The way the law is structured it’s impossible to get through to the real donors,” he said. And that is the goal of the changes contained in the ballot initiative, track the real donors of large amounts to campaigns and causes.

Among other things, said Stern, the ballot proposal would close “’dark money’ loopholes for nonprofit donors” by requiring disclosure of anyone who contributes $10,000 or more if the money winds up being used in a political effort.

It also will impose consistent statewide tracking of major donors, including those who give only to local campaigns, and trace the real sources of political money both inside and outside the state.

If approved by voters, the initiative would allocate $13 million to update the Secretary of State’s system of collecting campaign finance information and make it all easily accessible online by July 1, 2018.

Most of the new initiative is directed at statewide candidates, legislators and lobbyists. But there are at least two provisions for local government.

One would require a major donor who gives only on the local level to file a major donor statement with the Secretary of State, the same as major donors to legislative and statewide campaigns. That change would enable the public to see what candidates and issues on the local level are receiving contributions from a major donor, something they can’t track now.

“You’ll be able to see who they are,” said Stern.

In addition, any local jurisdiction that has its candidate finance forms available electronically, would have to give that information to the Secretary of State.

Many cities and other local jurisdictions, like water districts, don’t put their candidate campaign information on their web sites, saying it costs too much. But Stern said the cost has dropped dramatically in recent years and local jurisdictions use cost as “an excuse because they don’t want to do it.”

Other changes included in the initiative would ban gifts to legislators from lobbyists or lobbyist employers, tighten or reduce the rules on lawmakers receiving gifts from others and strengthen the laws regulating government procurement contracts.

It also would prohibit campaign “earmarking” in which money is donated to a committee with the requirement or tacit understanding it will be re-donated to a specific candidate or cause. If money is designated for a specific candidate or political effort, the donor must be reported.

One of the most visible changes will be in TV ads. Under the proposed changes, TV, radio, and newspaper political ads must name the specific, top donors to the campaigns. Now, candidates list a committee name that paid for the ad, but the name may not tell the public much about where the money really came from.

Asked what he would say to any opponents of such laws, Winuk replied “I’d tell them to look at most (current) campaign television ads and say with a straight face they can tell who the campaign donors are.”

As if to set an example, the web site for the Voters’ Right to Know Act includes the statement: “Paid for by Californians for the Right to Know. Major funding provided by James Heerwagen.”

Under the law, said Winuk, they didn’t have to make that disclosure until they actually began circulating petitions but “we’re being 100 percent transparent.”

You can contact Tracy Wood at twood@voiceofoc.org and follow her on Twitter: @TracyVOC.

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